This is how I understand it....please someone jump in and add to this if I am missing anything...

"Linking" is when you link to a store's or designers website - thus directing people to their blog/store. (example: their main site address www.oscraps.com ) This is okay

"Hotlinking" (Bandwidth Theft) is when you link directly to another sites images or files usually done without permission and is considered stealing. A lot of designers pay for bandwidth so when you hotlink it uses their bandwidth and they actual have to pay for that.

A common example of hotlinking in the digi-world is when people give away someone's freebie link instead of linking to that person's blog or store. That is considered hot linking and piracy.

I hope that helps...their is also a great site to visit geared toward scrappers and designers called "Stop Piracy" it has a wealth of information if you want to check it out